What kind of financial poise can hiring a corporate trustee provide? For the average individual, even one with significant means, this concept can be rather obtuse. When a family employs a qualified corporate trustee, they may enjoy more effective wealth and estate planning, more professional wealth and estate services, asset protection, lower costs and taxes, and increased wealth and protection of the family unit. These benefits and others fall under the five key points below.
A corporate trustee is an entity, such as a bank-owned or independent trust company. A trustee manages the assets, distributions and other obligations within a trust agreement. They adhere to laws and the preferences of the grantors of the trust. Many corporate trustees provide other fiduciary services, such as serving as a guardian or executor.
You may also like, “Does Balancing Your Health and Finances = Wellness?”
Some individuals decide to be their own trustee, or, when it’s necessary, choose another individual, such as a family member. Many family offices with complex needs decide to “keep it in the family” by having family members serve as trustees. The biggest reason stated is that the family members know one another and are thus best equipped to serve in that role. While this sentiment is admirable, it may not always be the best route to ensure an effective and efficient option.Many corporate trustees provide other fiduciary services, such as serving as a guardian or executor. Click To Tweet
Here are five reasons why hiring a corporate trustee may be wise, even for family offices:
First, a good “trusted” advisor can serve as the coordinator of a person’s or family’s financial well-being. A corporate trustee is uniquely positioned to understand a wide range of issues, including estate planning, taxes, laws and investments, while also administering the legal intentions of trust documents. Trust companies can’t draft legal documents, but they can work with the family and other professionals (attorneys, accountants, etc.) by coordinating and providing perspective on the real issues families face. In baseball metaphor, they are like a good general manager.
An often-overlooked benefit of hiring a corporate trustee is their use of complex trust accounting systems. These systems are important for the proper accounting of principal and income across multiple beneficiaries. Many family offices overlook this facet and inadvertently create accounting nightmares that are often hard to unwind. Recordkeeping alone can save families valuable time and money, as well as reduce family stress.
Corporate trustees are not only accountable to beneficiaries, but to the government as well. Trust companies must be approved and are overseen by federal or state regulatory bodies. They even undergo routine audits and/or exams. Trust companies also have legal requirements for capital, bonding and insurance. Family members may not always be up on the latest laws, nor may they follow legal documents as written.
While some like the idea of family members as trustees, people age, become distracted or are incapable of serving as a trustee. They may also develop differences in opinions. In those situations, a good corporate trustee can serve in an objective, consistent manner, minimizing rifts within the family.
You may also like, “Living Frugally Makes for a Rich Life- If You’re Willing to Wait”
Whether it be the loss of a loved one or a family member that no longer has the health to manage his or her financial affairs, hiring a corporate trustee can relieve those burdens. This is particularly comforting when emotions run high and differences among family members present problems. In those situations, a third-party decision maker can lead to a positive outcome and protect family balance.
Whether it be the loss of a loved one or a family member that no longer has the health to manage his or her financial affairs, hiring a corporate trustee can relieve those burdens.
There are many issues to consider before hiring a corporate trustee, such as expertise, chemistry and costs. However, one of the biggest reasons people don’t hire a corporate trustee is the fear of losing control. Rest assured there are many ways to manage that concern.
Reed Murphy has over 27 years of experience, having held a variety of executive roles in the industry, including chairman of the investment policy group of a global financial services firm, which oversaw the creation and distribution of advice to approximately $695 billion in client assets. He currently serves as President and Chief Investment Officer…
Ten Reasons Why the Blockchain Won’t Be Stopped (And Shouldn’t)
Don’t Go It Alone: The Best Advisor You Can Hire Is Worth Every Penny
Improve Your Relationship with Your Advisor (and Improve Your Bottom Line)
$30 Trillion Wealth Transfer: Most Advisors Miss This Critical Step
The Doctor And the Drug Dealer: A Parable About Registered Investment Advisors and Broker-Dealers
Episode 9 with Richard K. Roscelli
Please log in again. The login page will open in a new window. After logging in you can close it and return to this page.